Question

Hanmi Financial Corporation is the parent company of Hanmi Bank. The company’s stock split was announced in the following wire: LOS ANGELES Jan. 20 BUSINESS WIRE—Hanmi Financial Corporation (Nasdaq), announced that the Board of Directors has approved a two-for-one stock split, to be effected in the form of a 100 percent common stock dividend. Hanmi Financial Corporation stockholders of record at the close of business on January 31 will receive one additional share of common stock for every share of common stock then held. Distribution of additional shares issued as a result of the split is expected to occur on or about February 15. At the time of the stock split, 24.5 million shares of common stock, $0.001 par per share, were outstanding. Required: 1. Prepare the journal entry, if any, that Hanmi recorded at the time of the stock split. 3. If Hanmi's stock price had been $36 at the time of the split, what would be its approximate value after the split (other things equal)?

Answer 1

Answer:

1a Dr common stock distributable    $24500 Cr Common stock

$18

Explanation:

There are 24. million shares and $0.001 per share

Common stock=24500000×$0.001=$24500

At the time of the split

Dr common stock distributable       $24500

Cr common stock                                                $24500

If the price is $36  

We need to find the share price after the split

The split is 2 is to one according to the reverse split stock this causes the the $1 par values to be one and half of the $2 dollar par value

so one and half of $36 =$18